SOURCE: NMI Holdings, Inc.

August 02, 2016 16:00 ET

NMI Holdings, Inc. Reports Second Quarter Net Income of $2 Million, Enters Into Reinsurance Treaty to Support Growth

EMERYVILLE, CA--(Marketwired - August 02, 2016) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $2.0 million, or $0.03 per share, for the second quarter ended June 30, 2016. This compares with a net loss of $3.9 million, or $(0.07) per share, in the prior quarter and a net loss of $10.4 million, or $(0.18) per share, in the second quarter of 2015. Total revenue for the quarter was $29.6 million, up 33% from $22.2 million in the prior quarter and up 171% from $10.9 million in the second quarter of 2015.

The company also announced today that it has entered into a quota share reinsurance agreement with a panel of third-party reinsurance providers. The company expects that Fannie Mae and Freddie Mac will allow full credit under the Private Mortgage Insurer Eligibility Requirements (PMIERs) for risk ceded under the agreement.

Bradley Shuster, chairman and CEO of National MI, said, "In the second quarter we achieved GAAP profitability, a significant milestone for this young company just three years after writing our first mortgage insurance policy. It is a reflection of our dedication to customer service, our disciplined approach to account development, and diligent management of both risk and expenses. We are grateful to our customers for their belief in us, our employees for their hard work and loyalty, and our shareholders and other business partners for their support of National MI since its founding. We are at an exciting inflection point in our development as we now have visibility to rapid earnings growth for many years to come. Looking ahead, we now expect to report pre-tax income of $7 to $10 million for the full year 2016, and are reaffirming our guidance for pre-tax income of at least $60 million in 2017."

  • As of June 30, 2016, the company had primary insurance-in-force of $23.6 billion, up 27% from $18.6 billion at the prior quarter end and up 229% over $7.2 billion as of June 30, 2015.
  • Premiums earned for the quarter were $26.0 million, up 31% from $19.8 million in the prior quarter and up 194% over $8.9 million in the same quarter a year ago.
  • Total NIW of $5.8 billion in the second quarter was up 37% over $4.3 billion in the prior quarter and up 129% over $2.5 billion in the second quarter of 2015.
  • Monthly premium NIW was $3.7 billion, an increase of 49% over $2.5 billion in the prior quarter and an increase of 153% over the second quarter of 2015. Single premium NIW of $2.1 billion was up 21% from the prior quarter and up 96% compared with the same quarter a year ago.
  • Total underwriting and operating expenses in the second quarter were $23.2 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $22.7 million, including $1.4 million of share-based compensation, in the prior quarter, and $20.9 million, including $2.1 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.4 million, resulting in a loss ratio of 1.8%.
  • As of the end of the second quarter, the company had approved master policies in place with 1,061 customers, up from 1,023 as of the end of the prior quarter, and up from 842 as of the end of the second quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 518, which compares with 469 in the prior quarter and 340 in the same quarter a year ago. On an ever-to-date basis, customers delivering NIW grew to 649.
  • At quarter-end, cash and investments were $654 million, including $78 million at the holding company, and book equity was $422 million, equal to $7.14 per share. This book value excludes any benefit attributable to the company's deferred tax asset of approximately $66 million as of Dec. 31, 2015.
  • At quarter-end, the company had total PMIERs available assets of $432 million, which compares with risk- based required assets under PMIERs of $377 million.
   
   Quarter   Quarter   Quarter         
   Ended   Ended   Ended  Growth
  Growth
 
   6/30/2016   3/31/2016   6/30/2015  Q/Q    Y/Y   
Primary Insurance-in-Force ($billions)   23.62    18.56    7.19  27 % 228 %
New Insurance Written - NIW ($billions)                       
 Monthly premium   3.70    2.49    1.46  49 % 153 %
 Single premium   2.14    1.76    1.09  21 % 96 %
 Total   5.84    4.25    2.55  37 % 129 %
Premiums Earned ($millions)   26.04    19.81    8.86  31 % 194 %
Underwriting & Operating Expense ($millions)   23.23    22.67    20.91  2 % 11 %
Loss Expense ($millions)   0.47    0.46    -  3 % -  
Loss Ratio   1.8 %  2.3 %  -         
Cash & Investments ($millions)   654    630    434  4 % 51 %
Book Equity ($millions)   422    410    412  3 % 2 %
Book Value per Share  $7.14   $6.94   $7.01  3 % 2 %
Approved Master Policies   1061    1023    842  4 % 26 %
Customers Generating NIW   518    469    340  10 % 52 %
                  
                  

Reinsurance Agreement
Effective Sept. 1, 2016, the company's quota share reinsurance agreement covers the following components of its portfolio, subject to certain limitations and conditions:

  • Approximately 23% of existing policies written as of Aug. 31, 2016.
  • Approximately 95% of the company's pool agreement with Fannie Mae.
  • Approximately 23% of policies written from Sept. 1, 2016 through Dec. 31, 2017.

National MI will receive a 20% ceding commission for ceded premiums related to this transaction, as well as a profit commission provided that the loss ratio on the loans covered under the agreement generally remains below 60%. For risk ceded under the agreement, the implied after-tax cost of capital over the term of the transaction is expected to be approximately 3%.

Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The call also can be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 40158937, or by referencing NMI Holdings, Inc.

About National MI
National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NASDAQ: NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs that may impact the use of private mortgage insurance; our ongoing ability to comply with the financial requirements of the PMIERs; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; our ability to successfully execute and implement our capital plans, including our ability to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us and to the GSEs; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; adoption of new or changes to existing laws and regulations or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; our ability to utilize our net operating loss carryforwards, which could be limited or eliminated in various ways, including if we experience an ownership change as defined in Section 382 of the Internal Revenue Code; and general economic downturns and volatility. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2015, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com

   
   
Consolidated statements of operations and comprehensive income                 
   For the three months ended June 30,   For the six months ended June 30,  
   2016   2015   2016   2015  
Revenues  (In Thousands, except for share data)  
 Net premiums written  $48,862   $20,347   $86,991   $33,268  
 Increase in unearned premiums   (22,821 )  (11,491 )  (41,143 )  (17,476 )
 Net premiums earned   26,041    8,856    45,848    15,792  
 Net investment income   3,342    1,688    6,573    3,283  
 Net realized investment gains (losses)   61    354    (824 )  967  
 Other revenues   37    -    69    -  
Total revenues   29,481    10,898    51,666    20,042  
Expenses                     
 Insurance claims and claims expenses   470    (6 )  928    98  
 Underwriting and operating expenses   23,234    20,910    45,906    39,259  
Total expenses   23,704    20,904    46,834    39,357  
Other (expense) income                     
 (Loss) gain from change in fair value of warrant                     
 liability   (59 )  (106 )  611    1,142  
 Interest expense   (3,707 )  -    (7,339 )  -  
Total other (expense) income   (3,766 )  (106 )  (6,728 )  1,142  
                  
Income (loss) before income taxes   2,011    (10,112 )  (1,896 )  (18,173 )
 Income tax expense   -    241    -    -  
Net income (loss)  $2,011   $(10,353 ) $(1,896 ) $(18,173 )
                  
Earnings (loss) per share                     
 Basic  $0.03   $(0.18 ) $(0.03 ) $(0.31 )
 Diluted  $0.03   $(0.18 ) $(0.03 ) $(0.31 )
                  
Weighted average common shares outstanding                     
Basic   59,105,613    58,720,095    59,005,983    58,603,644  
Diluted   59,830,899    58,720,095    59,005,983    58,603,644  
Loss Ratio(1)   2 %  - %  2 %  1 %
Expense Ratio(2)   89    236    100    249  
Combined ratio   91 %  236 %  102 %  249 %
                  
Net income (loss)  $2,011   $(10,353 ) $(1,896 ) $(18,173 )
Other comprehensive income (loss), net of tax:                     
 Net unrealized gains (losses) in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $0 and ($1,431) for the three monthsended June 30, 2016 and 2015, respectively, and $0 for both the six months ended June 30, 2016 and 2015   8,670    (2,205 )  17,771    467  
 Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented   (61 )  (354 )  824    (967 )
Other comprehensive income (loss), net of tax   8,609    (2,559 )  18,595    (500 )
Comprehensive income (loss)  $10,620   $(12,912 ) $16,699   $(18,673 )
   
(1) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
   
   
   
Consolidated balance sheets  June 30, 2016   December 31, 2015  
Assets  (In Thousands, except for share data)  
 Fixed maturities, available-for-sale, at fair value (amortized cost of $593,807 and $564,319 as of June 30, 2016 and December 31, 2015, respectively)  $607,318   $559,235  
 Cash and cash equivalents   46,827    57,317  
 Premiums receivable   8,868    5,143  
 Accrued investment income   3,068    2,873  
 Prepaid expenses   1,810    1,428  
 Deferred policy acquisition costs, net   25,128    17,530  
 Software and equipment, net   19,690    15,201  
 Intangible assets and goodwill   3,634    3,634  
 Other assets   85    90  
Total assets  $716,428   $662,451  
          
Liabilities           
 Term loan  $144,107   $143,939  
 Unearned premiums   131,916    90,773  
 Accounts payable and accrued expenses   15,502    22,725  
 Reserve for insurance claims and claim expenses   1,475    679  
 Warrant liability, at fair value   856    1,467  
 Deferred tax   137    137  
Total liabilities   293,993    259,720  
Commitments and contingencies           
          
Shareholders' equity           
 Common stock - class A shares, $0.01 par value; 59,128,011 and 58,807,825 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)   591    588  
 Additional paid-in capital   573,342    570,340  
 Accumulated other comprehensive income (loss), net of tax   11,121    (7,474 )
 Accumulated deficit   (162,619 )  (160,723 )
Total shareholders' equity   422,435    402,731  
Total liabilities and shareholders' equity  $716,428   $662,451  
         
   
   
Historical Quarterly Data  2016   2015  
   June 30   March 31   December 31   September 30   June 30   March 31  
Revenues  (In Thousands, except for share data)  
 Net premiums written  $48,862   $38,129   $45,582   $35,360   $20,347   $12,921  
 Increase in unearned premiums   (22,821 )  (18,322 )  (28,702 )  (22,526 )  (11,491 )  (5,985 )
 Net premiums earned   26,041    19,807    16,880    12,834    8,856    6,936  
 Net investment income   3,342    3,231    2,078    1,884    1,688    1,596  
 Net realized investment gains                               
 (losses)   61    (885 )  (121 )  (15 )  354    613  
 Other revenues   37    32    25    -    -    -  
Total revenues   29,481    22,185    18,862    14,703    10,898    9,145  
Expenses                               
 Insurance claims and claims expenses   470    458    371    181    (6 )  104  
 Underwriting and operating expenses   23,234    22,672    21,686    19,653    20,910    18,350  
Total expenses   23,704    23,130    22,057    19,834    20,904    18,454  
                          
Other (expense) income (1)   (3,766 )  (2,962 )  (1,626 )  332    (106 )  1,248  
                          
Income (loss) before income taxes   2,011    (3,907 )  (4,821 )  (4,799 )  (10,112 )  (8,061 )
 Income tax expense (benefit)   -    -    -    -    241    (241 )
Net income (loss)  $2,011   $(3,907 ) $(4,821 ) $(4,799 ) $(10,353 ) $(7,820 )
                          
Earnings (loss) per share                               
 Basic  $0.03   $(0.07 ) $(0.08 ) $(0.08 ) $(0.18 ) $(0.13 )
 Diluted   0.03    (0.07 )  (0.08 )  (0.08 )  (0.18 )  (0.13 )
                          
Weighted average common shares                               
outstanding                               
Basic   59,105,613    58,936,694    58,781,566    58,741,328    58,720,095    58,485,899  
Diluted   59,830,899    58,936,694    58,781,566    58,741,328    58,720,095    58,485,899  
                          
Other data                               
Loss Ratio (2)   2 %  2 %  2 %  1 %  - %  1 %
Expense Ratio (3)   89 %  114 %  128 %  153 %  236 %  265 %
Combined ratio   91 %  117 %  131 %  155 %  236 %  266 %
                         
(1) Other (expense) income includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.
(2) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(3) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
   
 
 
New Insurance Written (NIW), Insurance in Force (IIF) and Premiums        
         
The tables below show primary and pool NIW and IIF, by quarter, for the last six quarters.      
 
Primary NIW  Three months ended
   June 30, 2016  March 31, 2016  December 31, 2015  September 30, 2015  June 30 2015  March 31, 2015
   (In Millions)
Monthly  $3,700  $2,492  $2,029  $1,582  $1,460  $919
Single   2,138   1,762   2,518   2,051   1,089   777
Primary  $5,838  $4,254  $4,547  $3,633  $2,549  $1,696
                   
Primary and pool IIF  As of
   June 30, 2016  March 31, 2016  December 31, 2015  September 30, 2015  June 30 2015  March 31, 2015
   (In Millions)
Monthly  $12,529  $9,210  $6,958  $5,087  $3,617  $2,259
Single   11,095   9,354   7,866   5,514   3,573   2,576
Primary   23,624   18,564   14,824   10,601   7,190   4,835
                   
Pool   3,999   4,136   4,238   4,340   4,476   4,621
Total  $27,623  $22,700  $19,062  $14,941  $11,666  $9,457
                   
  
  
Portfolio Statistics 
  
The table below shows primary portfolio trends, by quarter, for the last six quarters. 
  
Primary portfolio trends          As of and for the quarter ended          
   June 30,
2016
  March 31, 
2016
  December 31, 
2015
  September 30, 
2015
  June 30,
2015
  March 31, 
2015
 
   ($ Values In Millions)  
New insurance written  $5,838   $4,254   $4,547   $3,633   $2,549   $1,696  
New risk written   1,411    1,016    1,105    887    615    396  
Insurance in force (1)   23,624    18,564    14,824    10,601    7,190    4,835  
Risk in force (1)   5,721    4,487    3,586    2,553    1,715    1,146  
Policies in force (count) (1)   100,547    79,700    63,948    46,175    31,682    21,225  
Weighted-average coverage (2)   24.2 %  24.2 %  24.2 %  24.1 %  23.9 %  23.7 %
Loans in default (count)   79    55    36    20    9    6  
Percentage of loans in default   0.1 %  0.1 %  0.1 %  - %  - %  - %
Risk in force on defaulted                               
loans  $4   $3   $2   $1   $1   $-  
Average premium yield (3)   0.47 %  0.45 %  0.49 %  0.52 %  0.51 %  0.55 %
Annual persistency (4)   83.3 %  82.7 %  79.6 %  71.6 %  65.5 %  59.2 %
                         
(1) Reported as of the end of the period.
(2) End of period risk in force (RIF) divided by IIF.
(3) Average premium yield is calculated by dividing primary net premiums earned by average IIF for the period, annualized.
(4) Defined as the percentage of IIF that remains on our books after any 12-month period.
   
  
   
The tables below reflect our total primary NIW by FICO, LTV, and purchase/refinance mix.     
   
   
Primary NIW by FICO  Three months ended  
   June 30, 2016   March 31, 2016   June 30, 2015  
   (In Millions)  
 > = 760  $3,160   $2,283   $1,182  
 740-759   961    712    377  
 720-739   672    473    422  
 700-719   541    411    242  
 680-699   308    245    203  
 < =679   196    130    123  
Total  $5,838   $4,254   $2,549  
   
   
Primary NIW by LTV  Three months ended  
   June 30, 2016   March 31, 2016   June 30, 2015  
   (In Millions)  
 95.01% and above  $362   $209   $84  
 90.01% to 95.00%   2,633    1,816    1,149  
 85.01% to 90.00%   1,732    1,420    842  
 85.00% and below   1,111    809    474  
Total  $5,838   $4,254   $2,549  
   
   
Primary NIW by purchase/refinance mix  Three months ended  
   June 30, 2016   March 31, 2016   June 30, 2015  
   (In Millions)  
 Purchase  $4,199   $2,919   $1,619  
 Refinance   1,639    1,335    930  
Total  $5,838   $4,254   $2,549  
   
   
The tables below show the primary weighted average FICO and the weighted average loan-to-value ratio (LTV), by policy type, for NIW in the quarters presented.  
   
Weighted Average FICO                
   June 30, 2016   March 31, 2016   June 30, 2015  
Monthly   752    753    742  
Single   762    759    760  
   
   
Weighted Average LTV                
   June 30, 2016   March 31, 2016   June 30, 2015  
Monthly   92 %  92 %  92 %
Single   91    91    91  
             
 
 
The table below reflects a summary of our primary IIF and RIF by book year.
 
 
Primary IIF and RIF     As of June 30, 2016
      IIF  RIF
      (In Millions)
June 30, 2016      $9,951  $2,393
2015       11,348   2,762
2014       2,266   552
2013       59   14
Total      $23,624  $5,721
 
The tables below reflect our total primary IIF and RIF by FICO, average loan size, LTV, and loan type.
 
Primary IIF by FICO  As of
   June 30, 2016  March 31, 2016  June 30, 2015
   (In Millions)
 > = 760  $11,929  $9,146  $3,323
 740-759   3,876   3,045   1,153
 720-739   3,082   2,515   1,109
 700-719   2,341   1,877   706
 680-699   1,561   1,305   595
 < =679   835   676   304
Total  $23,624  $18,564  $7,190
 
 
Primary RIF by FICO  As of
   June 30, 2016  March 31, 2016  June 30, 2015
   (In Millions)
 > = 760  $2,895  $2,206  $772
 740-759   951   747   276
 720-739   750   614   273
 700-719   566   453   173
 680-699   369   312   147
 < =679   190   155   74
Total  $5,721  $4,487  $1,715
 
 
Primary Average Loan Size by FICO  As of
   June 30, 2016  March 31, 2016  June 30, 2015
   (In Millions)
 > = 760  $249  $247  $241
 740-759   239   237   233
 720-739   234   232   227
 700-719   232   229   221
 680-699   223   220   217
 < =679   209   206   205
  
   
   
Primary IIF by LTV      As of      
   June 30, 2016   March 31, 2016   June 30, 2015  
   (In Millions)  
 95.01% and above  $1,049   $699   $122  
 90.01% to 95.00%   10,574    8,220    3,132  
 85.01% to 90.00%   7,754    6,326    2,534  
 85.00% and below   4,247    3,319    1,402  
Total  $23,624   $18,564   $7,190  
   
   
Primary RIF by LTV      As of      
   June 30, 2016   March 31, 2016   June 30, 2015  
   (In Millions)  
 95.01% and above  $293   $196   $36  
 90.01% to 95.00%   3,116    2,423    927  
 85.01% to 90.00%   1,838    1,498    598  
 85.00% and below   474    370    154  
Total  $5,721   $4,487   $1,715  
   
   
Primary RIF by Loan Type      As of      
   June 30, 2016   March 31, 2016   June 30, 2015  
   
 Fixed   98 %  98 %  97 %
 Adjustable rate mortgages:                
  Less than five years   -    -    -  
  Five years and longer   2    2    3  
Total   100 %  100 %  100 %
             
  
  
As of June 30, 2016 and June 30, 2015, 100% of our pool IIF and RIF was comprised of insurance on fixed rate mortgages. 
  
The table below reflects a summary of the change in total primary IIF for the following periods. 
  
Primary IIF  Three months ended  
   June 30, 2016   March 31, 2016   June 30, 2015  
   (In Millions)  
IIF, beginning of period  $18,564   $14,824   $4,835  
 NIW   5,838    4,254    2,548  
 Cancellations and other reductions   (778 )  (514 )  (193 )
IIF, end of period  $23,624   $18,564   $7,190  
             
   
          
Geographic Dispersion  
   
The following table shows the distribution by state of our primary RIF.        
   
Top 10 primary RIF by state  As of  
   June 30, 2016   March 31, 2016   June 30, 2015  
California  13.0 % 13.2 % 13.6 %
Texas  6.8   6.8   7.4  
Virginia  6.4   5.8   5.3  
Florida  5.0   5.3   4.8  
Colorado  4.1   4.3   4.2  
Michigan  4.1   4.1   3.6  
Arizona  3.8   3.8   3.7  
Pennsylvania  3.5   3.5   3.3  
Maryland  3.4   3.6   3.5  
North Carolina  3.4   3.1   2.1  
Total  53.5 % 53.5 % 51.5 %
          
 
 
The following table shows portfolio data by origination year.
   
Origination year  As of June 30, 2016  
   
Original
Insurance
Written
 
Remaining
Insurance in
Force
 
% Remaining
of Original
Insurance
  
Policies
Ever in
Force
 
Number of
Policies in
Force
 
Number of
Loans in
Default
 

# of Claims
Paid
 Incurred
Loss Ratio
(Inception to
Date) (1)
  

Cumulative
default rate (2)
 
   ($ Values in Millions)  
2013  $162  $59  36 % 655  289  -  1  - % 0.2 %
2014   3,451   2,266  66 % 14,786  10,640  30  2  2.0 % - %
2015   12,422   11,348  91 % 52,550  49,180  47  2  1.9 % 0.4 %
2016 (through June 30)   10,092   9,951  99 % 40,862  40,438  2  -  0.2 % - %
Total  $26,127  $23,624      108,853  100,547  79  5         
                        
(1) The ratio of total losses incurred (paid and reserved) divided by the total premiums earned.
(2) The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force.
   
  
  
The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses: 
             
  Three months ended  Six months ended 
  June 30, 2016  June 30, 2015  June 30, 2016  June 30, 2015 
  (In Thousands) 
Beginning balance $1,137  $187  $679  $83 
                 
Add claims incurred:                
 Claims and claim expenses incurred:                
  Current year  560   59   1,113   139 
  Prior years  (90)  (65)  (185)  (41)
Total claims and claims expenses incurred  470   (6)  928   98 
                 
Less claims paid:                
 Claims and claim expenses paid:                
  Current year  -   -   -   - 
  Prior years  132   -   132   - 
Total claims and claim expenses paid  132   -   132   - 
                 
Balance, June 30 $1,475  $181  $1,475  $181 
                 
  
  
The following table provides a reconciliation of the beginning and ending count of loans in default. 
  
   Three months ended   Six months ended  
   June 30, 2016   June 30, 2015   June 30, 2016   June 30, 2015  
Beginning default inventory   55    6    36    4  
Plus: new defaults   50    5    89    10  
Less: cures   (23 )  (2 )  (43 )  (5 )
Less: claims paid   (3 )  -    (3 )  -  
Ending default inventory   79    9    79    9  
   
  
The following tables provide details of our claims and reserves.  
   
   Three months ended   Six months ended  
   June 30, 2016   June 30, 2015   June 30, 2016   June 30, 2015  
   ($ Values In Thousands)  
Number of claims paid   3    -    3    -  
Total amount paid for claims  $132   $-   $132   $-  
Average amount paid per claim  $44   $-   $44   $-  
Severity   71 %  -    71 %  -  
   
Average reserve per default:   As of June 30, 2016  As of June 30, 2015
    (In Thousands)
Case   $17  $19
IBNR    1   1
Total   $18  $20
        
  
  
The following table provides a trended comparison of the PMIERs financial requirements as reported by National MI. 
  
   As of  
   June 30, 2016   March 31, 2016   June 30, 2015  
         (In thousands )     
Available Assets  $432,074   $434,138   $431,411  
Risk-Based Required Assets   377,468    302,852    249,805  
              
Asset charge % (1)   6.10 %  6.12 %  6.17 %
   
(1) Asset charge represents the risk based required asset amount divided by the outstanding RIF on performing primary loans.

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